How DealCheck Is Using Realty Mole Data to Make Investment Property Analysis Faster & More Accurate
Both new and seasoned investors will agree that analyzing the potential cash flow, profit and returns is one of the most critical steps before buying investment properties.
It’s often said that money in real estate is made when you buy, so having accurate cash flow projections, rent and valuation estimates, as well as exit strategies is essential for becoming a successful real estate investor.
While in the past many investors relied on complex and unwieldy spreadsheets to perform the analysis, modern technology has made it possible to analyze and value potential investment properties in seconds right from your computer, tablet or phone.
DealCheck has been one of the leaders in the space, making property analysis fast, accurate and more user-friendly, especially for beginners. And it has been leveraging RealtyMole’s property data to help it do that.
DealCheck – The Complete Property Analysis Solution
DealCheck is a property analysis app that you can use to analyze rental properties, BRRRR’s (buy, rehab, rent, refinance, repeat method), flips, multi-family and commercial deals.
It can help investors calculate potential cash flow, investment returns, total profit after sale and dozens of other financial metrics that are important when evaluating potential investment properties.
How to Quickly Analyze Rentals with DealCheck
You can use DealCheck to analyze a variety of properties and acquisition scenarios. Let’s take a look how this works for analyzing a rental property.
Start by importing available property data.
With DealCheck, you can quickly search for properties by address and import their basic home details (beds, baths, square footage, year built, etc.), estimated value, estimated rent, list price, photos and description from available public records and active listings.
Once you’ve imported some basic information about a property, you can customize your acquisition costs, financing and operating information to match your investment strategy.
Customize financing, acquisition costs, rent and expenses.
DealCheck allows you to use rough estimates or itemize and break down your closing costs, financing terms, rehab budget and expenses one at a time.
While using rough estimates is great for getting analysis projections quickly, it can also be less accurate.
When you’ve found a property you’re particularly interested in, entering as many details as possible using DealCheck’s step-by-step worksheets is the best way to get the most accurate numbers.
Look up each property’s rental comps and estimated rent.
One of the most important numbers when entering property information is the gross rent – the total amount of money you expect to collect from your tenants.
The gross rent estimate will have a direct impact on the potential cash flow, investment returns and other performance metrics. Over-estimating the rent may lead to overly-optimistic projections, while under-estimating it may cause you to pass on a good investment.
This is where DealCheck is using the rental property data from RealtyMole to look up accurate rental comps and rent estimates for each property based on its location, type and size.
DealCheck’s rental comps tool will show you a list and map of comparable rental listings, their average listed rents and several different rent estimates of the subject property based on its comps and square footage.
Look up each property’s sales comps and estimated ARV.
While the after repair value (ARV) of a property will not directly impact its cash flow, it will help you understand where the asking price is relative to its fair market value.
It will also factor in the long-term return metrics like the return on investment (ROI) and internal rate of return (IRR).
Similar to its rental comps tool, DealCheck comes with a built-in sales comps page that will show you a list and a map of comps, their average sale prices and several potential valuations of the property to help you estimate its ARV.
View projected cash flow, returns and financial metrics.
Once you’ve customized the deal parameters and looked up rent and sales comps, the hard part is done – DealCheck will handle all of the financial calculations and show you a complete analysis of the property and your expected returns.
The property analysis page lists over a dozen financial metrics, and it can be a bit overwhelming for new investors. If you’re not sure where to look, focus on these 5 indicators:
- Total Cash Needed: This is the total amount of out-of-pocket funds you’ll need to purchase and rehab this property, so make sure this cash is available in your bank account.
- Monthly Cash Flow: This is the net amount you’ll receive from this rental property after paying all expenses and loan payments – your total take-home profit from this investment. It should be a healthy, positive number, ideally $200 or more.
- Capitalization Rate (Cap Rate): Although some investors prefer other return metrics, the cap rate is so widely used, it’s worth mentioning it here. The cap rate is calculated by dividing the yearly net operating income (NOI) by the property’s purchase price and can be used to compare different investments properties irrespective of the financing terms.
- Cash on Cash (COC) Return: The COC as an important return metric calculated by dividing the yearly cash flow by your total invested cash. Think of it as the yearly cash yield on the money you’ve originally invested. A COC greater than 10% is a minimum for many investors.
- Internal Rate of Return (IRR): This return metric shows an average, annualized return rate you’ll get on your invested cash that takes into account the loan paydown, price appreciation and all of the cumulative cash flow.
View buy & hold and sale projections.
While the property analysis page shows the numbers you should expect to see in the first year, the buy & hold projections page will allow you to view them for many years into the future.
This is great for seeing how your cash flow, returns and yields will change as you continue renting out the property and paying down your loan balance.
DealCheck’s buy & hold projections also include a section that will show your potential tax deductions for each year, as well as a detailed sale analysis breakdown you can use to plan your exist strategy.
Put together an offer to the seller based on your target criteria.
At times you’ll come across a property that’s decent, but doesn’t quite fit your minimum investment criteria.
Since a lot of the financial metrics can be improved by lowering the property’s purchase price, you may want to find out what price you can offer to the seller that will meet all of your purchase criteria.
That’s exactly what DealCheck’s Offer Calculator was designed to do. This tool uses reverse valuation to work backwards from your target criteria and calculate the highest price you can offer on the property to meet it.
For example, let’s say you want a rental property that:
- Has a minimum of $200 monthly cash flow
- Has a cash on cash (COC) return of at least 10%
- Will cost you no more than $100k out-of-pocket
You can plug this criteria into the Offer Calculator to get the maximum price you can offer to the seller for this property.
Once you have your “maximum allowable offer”, take a look at how much lower it is compared to the current asking price.
If it’s within reasonable range and you feel the seller is likely to accept it, you may have found yourself a winner. It’s time to call up your agent and start working on that offer letter.
But if the max offer is just too low for the seller to accept, or your current market is competitive, it may be time to move on and look for other opportunities. At least with DealCheck’s analysis tools that were built for speed, you only spent a few minutes on the whole process.
Using Technology to Get an Edge in a Competitive Market
With many real estate markets across the country getting more and more competitive, many investors find themselves making quick, on-the-spot decisions that are not always based on the most accurate information.
DealCheck was created to solve this problem by helping you analyze virtually any type of investment property in seconds, while still being confident in the accuracy of your analysis projections.
And thanks to RealtyMole’s vast property data set, it’s now possible to view rental comps and accurate rent estimates right from the DealCheck app.